Friday, 20 September 2019

How to Get a Personal Loan With a 600 Credit Score or Less

How to Get a Personal Loan With a 600 Credit Score or Less
23 Dec
4:54

getting a personal loan with low creditiStock

If you have a credit score of anything less than 600, you probably think it’s impossible to get a personal loan. Lenders traditionally favor borrowers with good credit scores, but that doesn’t mean there are no financing options available to you. Learn more about personal loans and how to get the money you need through a legitimate lender even when dealing with a less than ideal credit score.

What is a bad credit score for a personal loan?

If you’re looking for a personal loan with a credit score below 550, you’re probably going to run into some challenges. A FICO score that falls between 580 to 669 is considered fair; if you’re in this category, lenders will consider you a subprime borrower. Since your credit score isn’t ideal, you’ll likely receive a slightly higher rate on a personal loan — if you’re granted one at all — because you have a greater risk of default.

The process will be a lot more challenging if you’re working with a 450 credit score. The lowest FICO ranking, a score in the 300-to-579 range won’t impress lenders. Don’t be surprised if you have to put up collateral for a personal loan, if you’re approved for one at all.

Try not to become discouraged if your FICO score isn’t conducive to getting a competitive interest rate or a personal loan at all. You’re not alone in your credit struggle: 17% of people have a FICO score that falls between 300 to 579 and 20.2% have a score between 580 to 669, according to Experian. It’s important to remember the number reflected on your credit score today isn’t permanent, so use this as motivation to make positive changes that will give it a much-needed boost.

Securing a personal loan with fair or poor credit

Getting a personal loan with a 600 credit score — or less — will likely require some creativity on your part. Using the traditional route, finding a lender willing to take a chance on you and scoring a competitive interest rate might not be possible, so here’s a few alternative ideas:

1. Find a co-signer

If a family member or friend with a good credit score and a solid financial standing is willing to co-sign your personal loan, this can be monumentally helpful. Essentially, a co-signer agrees to assume financial responsibility for the loan if you don’t keep up with payments, which provides peace of mind to lenders. Consequently, this can help you qualify for a loan you might not get on your own merit and score a lower interest rate.

Do note that if you miss payments, this will have a negative impact on your co-signer’s credit score, so don’t ask this favor unless you’re certain you can fulfill the obligation.

2. Shop around

It’s never wise to go with the first loan offer you receive, and this is especially true if your credit isn’t the best. Research lenders in your area as well as online — you may find that online lenders are a cheaper option, as they don’t have the overhead costs that brick-and-mortar banks do.

3. Consider secured loans

When you’re looking for a personal loan with a credit score of 550, using collateral can help your case. If you back your loan with assets a lender can seize if you default — i.e., your home or savings account — you’re considered a lower risk. This can help you qualify for a loan you otherwise wouldn’t get or secure a more competitive interest rate.

You should proceed with caution when taking this route, because you’ll have a high price to pay if you default on the loan.

Personal loan options for borrowers with a fair or poor credit score

Finding a personal loan with a 600 credit score might require a bit of digging, but it can be done.

One easy way to get connected with lenders willing to work with you is through the LendingTree personal loan tool. After you share a few details about yourself and the loan you’re seeking, the tool can quickly match you with potential lenders. It might generate as many as five personal loan offers in just minutes, giving you a starting point for you search.

You can also find lenders willing to work with borrowers who have less-than-perfect credit. We’ve highlight a few such personal loan providers below.

Avant

As an online personal loan provider, Avant will consider applications from borrowers with less-than-perfect credit. A credit score of 600 to 700 is typical for borrowers who get approved for Avant loans, but you can still apply if your credit score is lower.

With Avant personal loans, you can request a loan amount of $2,000 to $35,000 and choose a loan length of 24 to 60 months. Offered rates are based on your employment and credit background, and some borrowers may also be charged an administration fee on issued loans.

Avant
APR

9.95%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Up to 4.75%

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. Read More

OneMain Financial

Next is OneMain Financial personal loans, which also have no minimum credit score requirements. It does list a few factors it weighs to determine if an applicant is eligible for a loan, such as your credit history, income and expenses, and the reason you’re borrowing.

OneMain offers loan amounts of $1,500 to $30,000, as well as term lengths of two to five years. Potential borrowers start with an online application, and upon approval must visit a OneMain Financial branch in person to verify personal details and review loan options.

Applicants who are denied or who want to qualify for a larger loan can get a second chance if they re-apply with a co-applicant or for a loan secured by collateral. Secured loans will need to be guaranteed by collateral. OneMain Financial accepts cars, trucks, motorcycles and recreational vehicles as collateral.

OneMain Financial
APR

16.05%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.Read More


All loans subject to OneMain’s normal credit policies. Loan approval and actual loan terms depend on your ability to meet OneMain’s standard credit criteria (including credit history, income and debts) and the availability of collateral. Collateral requirements would include a first lien on a motor vehicle that meets our value requirements, titled in your name with valid insurance. Collateral offered must meet our criteria. The lowest annual percentage rate (APR) shown represents APRs for top 10% of loans closed. Maximum APR is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.Residents in the following states are subject to the following loan size restrictions: Alabama residents: $2,100 minimum loan amount. California residents: $3,000 minimum loan amount. Florida residents: Unless you are a present customer, $8,000 maximum loan amount for unsecured loans. Georgia residents: Unless you are a present customer, $3,100 minimum loan amount. Iowa residents: Unless you are a present customer, $8,500 maximum loan amount for unsecured loans. Maine residents: Unless you are a present customer, $7,000 maximum loan amount for unsecured loans. Mississippi residents: Unless you are a present customer, $7,500 maximum loan amount for unsecured loans. North Carolina residents: Unless you are a present customer, $7,500 maximum loan amount for unsecured loans. New York residents: Unless you are a present customer, $20,000 maximum loan amount for unsecured loans. Ohio residents: $2,000 minimum loan amount. Texas residents: Unless you are a present customer, $8,000 maximum loan amount for unsecured loans. Virginia residents: $2,600 minimum loan amount. West Virginia residents: Unless you are a present customer, $7,500 maximum loan amount for unsecured loans. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

3 tips to spot a predatory lender

Searching for a personal loan with a 520 credit score puts you in a vulnerable position. Predatory lenders know you might not have many available options, and they’re ready to take full advantage of your situation. Expect to be pressured into sales tactics that guide you toward sky-high interest rates and exorbitant fees you shouldn’t have to pay.

Here’s a few ways to avoid this type of lender:

1. Pay attention to the size of the loan

At first glance, being offered a secured loan that’s larger than the amount you expected might seem like something positive. However, this could actually be a tactic known as equity stripping. Shady lenders use this approach to get you to default on a loan, thus entitling them to your collateral. Avoid falling into this trap by carefully calculating the amount you can afford to borrow.

2. Take note of added fees

A predatory lender could tack on several additional charges to the loan that you don’t actually need. Referred to as packing, you might be told services like credit insurance are mandatory. Stay alert by carefully reviewing any added fees, researching them and speaking up when something doesn’t seem right.

3. Read the fine print on the interest rate

It’s not uncommon for predatory lenders to advertise one interest rate and produce another at closing. Honest lenders are always upfront about interest rates, so if you’re informed at the last minute that a loan you thought was fixed-rate is actually variable-rate or comes with a hidden balloon payment, do not proceed with this arrangement.

Improve your credit score for future personal loans

Trying to get a personal loan with a 450 credit score — or any number that falls in the very poor or fair range — isn’t ideal. In some cases, you might need the extra cash immediately, so delaying your application isn’t an option. However, if you can wait to apply for the loan, this will give you time to work toward improving your credit score.

Taking steps to lower your debt utilization rate, making all payments in full and on time each month and avoiding debt altogether will help improve your finances. As your credit score rises, so will your ability to get both a personal loan with attractive terms and a competitive interest rate.

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Laura Woods

Laura Woods |

Laura Woods is a writer at MagnifyMoney. You can email Laura here

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Source: https://www.magnifymoney.com/blog/personal-loans/how-to-get-a-personal-loan-with-a-600-credit-score-or-less/

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